Good morning, everybody. This is John Yung from Citi China Healthcare, and thank you very much for dialing in today. I would like to express my congratulations to 3SBio and the senior management and the full house senior management that's today, to share with us the news about this recent acquisition on the CDMO business of Therapure. I'll just go ahead and pass along the mic to Ms. Rachel Zou, Senior Director of Corporate Development at 3SBio. Please, Rachel. Thank you.
Thank you, John, and good morning, everyone. Welcome to our conference call to discuss the acquisition of Therapure BioManufacturing through a joint venture led by 3SBio, which we announced last evening. On the call with me today is Dr. Lou Jing, our Chairman and Chief Executive Officer, Mr. Tan Bo, our Chief Financial Officer, Dr. James Zhang, General Manager of Sunshine Guojian, who's also in charge of our CDMO business, and Mr. Nick Green, CEO of Therapure BioManufacturing.
You will find a brief slide presentation in the Investor section of our website, 3sbio.com, under the section titled Presentations for your reference. After the prepared comments, we will open it up for questions. You can refer to our presentation for the details of our safe harbor statements and disclaimers with regard to financials, et cetera. With that, I will now turn the call over to Dr. Lou Jing.
Thank you, Rachel. Good morning, everyone, and thank you for joining us today. We're really excited to announce our agreement to acquire Therapure BioManufacturing through a joint venture founded with our clear and dedicated shareholders so that we can achieve more. 3SBio is a leading Chinese biotechnology company with a core competitive strength in R&D and innovation, strong market leadership, and advanced manufacturing technology producing high-quality biologics.
Over the past years, 3SBio has built and established an integrated biological manufacturing platform with state-of-the-art technical capabilities. As part of our global expansion plan and with a view to evolving into a China-based global biopharmaceutical company, 3SBio acquired Italian contract manufacturing company, Sirton, in 2014 and has continued to actively search for overseas targets with strong growth potential and complementary capabilities.
It is our strategic goal to enhance our global influence and strengthen our biologics manufacturing technologies while creating more value for our shareholders by fully leveraging its CDMO capabilities in the biopharma industry. Today's acquisition of Therapure BioManufacturing is an exciting next step in our continued effort to expand our global biopharma business platform.
We view the acquisition as a unique opportunity to better access the North American biopharmaceutical market and gain future access to Therapure customers' products. Therapure's biomanufacturing expertise in downstream purification and its recombinant plasma-derived proteins could also help 3S to acquire China rights of certain biological products. In addition, we see Therapure BioManufacturing as a good supplement to our current business, and will contribute revenue and profit to the group in the near term.
We will continue to have our CDMO business operate independently with the condition of not affecting the existing product business. We will also continue with building 3SBio to be a China-based global biopharmaceutical company with a focus on biological products and innovation. I will turn the call to Mr. Bo Tan to give everyone an overview of the announced transaction. Bo.
Thanks, Dr. Lou. I share, Dr. Lou, actually, our whole management team's excitement about the acquisition of Therapure BioManufacturing and the integration with our global biological capabilities. I would like to take a moment to give you an overview of the transaction, as well as to review some of the financial and structural aspects with all of you. As Dr. Lou mentioned, the announced acquisition of Therapure BioManufacturing is a key milestone in the global expansion strategy of our biologics business.
Its over 340 biological professionals in North America focus on operations and management, market development, research and development, and manufacturing, are expected to join the 3SBio group, which is a big step forward in our strategy to expand our talent pool and establish global presence. 3SBio's global expansion strategy is now on fast track.
We intended to accelerate the development and commercialization of innovative biological products toward our ultimate goal of benefiting patients around the world. Based on the pro forma accounts, Therapure BioManufacturing generated CAD 85 million in revenue in 2016, which represents over 60% growth since 2015, and also generated CAD 23 million in EBITDA in 2016.
We expected to achieve accretive earnings per share from 2018 after completion of the transaction in late 2017, and we also expected to deliver significant accretion in the medium to long term. The company has over $400 million backlog order by 2020. The announced transaction is structured as an asset purchase agreement with a Canada-based biologics manufacturer, Therapure Biopharma Inc., to acquire its CDMO business.
Therapure BioManufacturing for a total consideration of $290 million on an all-cash basis, representing an EBITDA multiple of 16 times based on the financial metrics in the last few year. The transaction will be pursued through a joint venture between 3SBio and CITIC PE, where the two parties have negotiated a shareholder agreement in which 3SBio owns 51% of the shares, with the remaining 49% held by funds advised by CITIC PE.
3SBio and CITIC PE seek to position this JV as a global, comprehensive, and biologics-focused CDMO platform going forward. Operationally, the CDMO business will continue to be operated under the Therapure brand and be led by Therapure's CEO, Nick Green, who joined us on the call today, and the current senior management team at its manufacturing facilities located in Mississauga, Ontario and Canada.
The current owner of Therapure, The Catalyst Capital Group Inc., will retain ownership of and will support future investment in Therapure's plasma protein and therapeutics products business under a separate entity. The joint venture between 3SBio and CITIC PE will contribute at least an additional CAD 20 million-CAD 25 million to the seller under the terms of the agreement to be used for the construction of a new commercial facility. In terms of the financing, we intend to use part of the proceeds from our July 2017 convertible bonds offering to support our contribution to the all-cash offer. In addition, the JV intends to raise a debt of $100 million to finance the deal. Overall, 3SBio, at least the company, will contribute around $100 million to the current consideration.
In terms of the next steps, we'll hold a general meeting to obtain approval from our shareholders to complete the acquisition, and we expect the completion to take place at end of this year. The feedback that we have received from the board, from the shareholders so far, have been both positive and supportive. I would now like to turn the call over to Dr. James Zhang, General Manager of Sunshine Guojian and Head of our CDMO activities worldwide, who will make a few comments about Therapure Biomanufacturing and the rationale for pursuing this transaction in more detail.
Okay. Thank you. Oh, thank you, everybody. I'm also really excited about this transaction. I was happy to give everyone an overview of Therapure Biomanufacturing, highlight the tremendous value this transaction bring to 3SBio shareholder. As we already know, Therapure Biomanufacturing is based near Toronto, Canada, actually very close to the airport. It enjoys strategic proximity to North American biotechnology hubs in Boston, New Jersey, and California.
It provides an array of therapeutic approach development, manufacturing service, including technology transfer and process development, analytical development and testing, scale-up cGMP manufacturing, aseptical fill finish, and formulation. Its production lines are established and buildings is established with certified cGMP by U.S., Canadian, EU, and authority for clinical and commercial manufacture biological products. Therapure Biomanufacturing is one of the only few CDMO business worldwide with the infrastructure and the experience to purify protein from plasma and transgenic animal source.
The company has developed a diversified base of over 20 customers, ranging from multiple leading global biopharm companies to emerging biotech companies around the world, especially focused on North America and Europe. Over 30 ongoing projects and a backlog of total over $400 million through 2020, which is the important factor we are found very attractive about this company.
Finally, Therapure Biomanufacturing is led by a highly experienced, visionary management team with decades of leadership contract research experience in the global CDMO industry. We are very excited that this team, led by CEO Nick Green, has agreed to join the new company and the global 3SBio organization to manage the integration and lead the next phase of the development of our CDMO business. And I would like to briefly expand on some of the important market opportunities and strategic benefits of this transaction.
As we know, with about $8 billion size biological CDMO market expected in 2020, we found this market is a very attractive market that is growing in the actual, in the year, high single digit to double digit growth rates. This growth is driven by several key industry trends. First, innovation and demand in the market for biologics services is expected to grow rapidly. Second, continued cost pressure are designed to grip and increase in regulatory complexity drive increased outsourcing. Actually, there are two main but distinct group of customer we look for to serve in this market. First is the increase in demand from smaller biotech companies that are rapidly growing in number. They don't have in-house capacity, so they need outsourced support to advance their molecular from research to the commercial marketplace.
Access to these clients takes place on local base, and access to the major local hubs such as Shanghai, Boston, New Jersey, Palo Alto in California, even North Carolina Research Triangle, we think is critical. The second is growing demand from larger biopharma company that are increasing their outsource activities so they can focus on their core business. For this client, large scale capability and ability to serve them globally as the one-stop service provider are very critical. 3SBio, over the last years, has consistently pursued a strategy to become a China-based global biopharmaceutical company. We have actively screened the market for optimal target to complement our strong capability in China and in Europe. In China, Sunshine Guojian and in Europe, Sirton Pharmaceuticals.
Through this acquisition, 3SBio intends to enter the North American biopharmaceutical sector, which is important milestone towards 3SBio strategy of building a leading global biologics business. The acquisition enable us to significantly enhance the relationship with global biotech, technology, and pharmaceutical company, and potentially explore various strategic partnership and license innovative products for the Chinese market. At the same time, with our CDMO business strategy, with this acquisition also, we expect to optimize the utilization of our manufacturing asset, enhance our own technical capacity, and improve our own financial profile. Let me expand on some of these points in some more detail. The acquisition is considered highly complementary to our existing CDMO business and asset and our overall long-term strategy.
We expect significant cost savings and entirely new revenue opportunities arise by effectively combining our leading mammalian cell culture capability with the significant expertise in downstream purification and transgenic plasma-derived protein that can be offered by Therapure CDMO business. Additional revenue opportunity and market access may also enable us to further leverage Sunshine Guojian's 30,000 liters mammalian cell fermentation capacity, which is currently the largest production capacity for therapeutic antibody in China.
Geographically, this acquisition as a strategical investment, will also provide us with an effective and convenient platform for launch the company's product in North America. For the company to license the new and innovative products from North America, and for us entering into the biological CDMO business in North America with the benefit of experienced management team, scale of the business, client base, and overseas presence for new growth opportunities.
Finally, this transaction will also allow us to seek and negotiate exclusive license, collaborative business opportunity with a quantity biopharmaceutical company, such as the sellers, after transaction sellers on the product company in North America. With the view to further expanding our existing product portfolio and accelerate the company's goal to establish a foothold in the North American market.
Overall, the transaction is expected to further enhance and strengthen the company's product portfolio, diversify our income stream, enable it to capture new growth opportunity, thereby realize a significant synergy with both CAS existing CDMO platform as well as with its main and fast-growing biopharmaceutical products business. Last and importantly, I would like to give Mr. Nick Green, the CEO of Therapure, the opportunity to say a few words on his perspective of this transaction. Nick, go ahead.
Thank you very much, James. First of all, I'd like to cover a few points and not be repetitive on some of the points that have already been made. But I think one of the important aspects is the commitment to the new platform. Throughout the acquisition process, myself and the Therapure team have got to know 3SBio very well indeed, and have been impressed with the talent, vision, and the assets that they have established in China. As we have presented our respective businesses to each other throughout the process, the potential to create a truly global CDMO with extensive capabilities and service offerings, we feel that would meet the industry's needs that we see today.
As a result, when we were asked to join the team and continue to lead the business and play a role in shaping the future service offering, I have to say, myself and the team were delighted to say yes. We see great potential going forward and are committed to playing our role in making this vision a reality. In terms of the confidence of Therapure and the operations going forward, I believe that Therapure has created a very strong business platform based on an extraordinary asset and talent pool.
While addressing many of the traditional biologic markets, Therapure also has a number of unique offerings, in particular in its knowledge and experience around challenging downstream processing such as plasma proteins and the ability to offer a full range of services from development, upstream manufacturing, mammalian cell culture, downstream processing, and fill finish, all under one roof.
Focusing on technical excellence and allied with customer service. We feel the strategy has served the business well to date and feel confident that this approach will serve the business well going forward as it has over the past years. Even more so, I think, combined with the capabilities of 3SBio. Substantial synergies in terms of our relationship will go down. One of the key drivers behind the acquisition, I believe, has been the obvious synergies between the two businesses.
3SBio is a highly experienced company which has operated with a very strong focus on the biologics sector. They have also developed an operational platform which includes significant capacity and capability in commercial-scale mammalian cell culture. Therapure, at the outset, started predominantly with clinical phase projects and has now become a commercial-scale operation.
Over the past nine years, we have brought together a team of seasoned professionals which have helped establish a range of efficient and effective processes ranging from client acquisition and business development, project management, planning, and operational execution. We feel sharing best practices between the two companies will accelerate the strategies on a global footprint of the 3SBio business.
Our business has grown dramatically since 2008, and we have reached a stage where we felt we needed not only commercial scale downstream processing and fill finish, but also commercial-scale mammalian cell culture, our upstream manufacturing capability. Overnight, 3SBio have significant capacity and capability in this area that allows PBI to meet client needs which in the past were unable to do so. Few companies in the world are able to offer the combination of services from a global footprint.
Of those that are, very few indeed are solely focused on biologics. Last but not least, we have been pleasantly surprised by how well the teams have connected as we have got to know each other throughout this process. The cultural fit has been frankly excellent. Therapure is a culturally diverse organization in of itself, and this has melded well with a highly sophisticated team at 3SBio, who themselves have a good understanding of how the Western businesses operate and think. This, I feel, will pay dividends as we integrate the businesses and seek to capitalize on the synergies going forward. Thank you very much.
Thank you for coming, Nick Green. Operator, we are ready to take questions.
Thank you. Ladies and gentlemen, we will now poll for questions. If you would like to register for a question, please press star one on your telephone.
Thank you, operator. John Yung, John.Yung@citi.com. My first question is really about the operation about Therapure. Could Nick maybe give us some insight on what is the current client situation of the CDMO business, and also what is the order backlog accumulation comparing to the revenue that we see in 2016? What kind of clients are we serving right now and the kind of concentration? That's the first question. The second question that's related to the operation is, I see there's a quite significant increase in the EBITDA margin from about 14% to 27% from 2015 to 2016. Could you probably share with us a little bit more, what is the reason behind this and what was the trend and the forward-looking trend for our margin of this business? That's the first part about Therapure.
For the second part of my question is just a overall deal question. Could the management share with us a little bit more on the timeline of this transaction and when we are going to see the next step forward and when we are seeing the deal to be closed. Also to mention, are both CITIC PE and also our fund abroad is already ready for this deal just to add on that. Thank you very much.
Okay.
Yes, thank you, John.
Yeah. Before Nick actually give you the response, I would just mention, since the deal has not closed, Nick might not be able to give you any specific client names, but I'm sure Nick will be happy to give you certain general description about who Therapure's clients are currently. Please go ahead, Nick.
Great. Thank you.
Yes, thank you. Our client base is mainly North American and European. We have a strategy that has traditionally targeted small and medium-sized pharmaceutical companies, mainly because they lack the expertise to manufacture all the financial resources, frankly, to manufacture their own products. There is a very good fit between CDMOs and small and medium-sized pharma.
The other areas we have focused on as well also include plasma proteins, of which Therapure is one of the few companies in the world that can handle plasma proteins. So we find a very strong niche in difficult-to-produce downstream processing challenges that also will be extended to things like transgenics. In addition to those, we do have big pharma clients, but it has not been a core focus, mainly because, as I mentioned in my earlier points, our mammalian cell culture capacity has been small to medium-sized.
The capacity that I was fortunate enough to see in Shanghai when I was over recently is a truly commercial scale. So it puts Therapure into a position where we can bid on business that is quite different going forward. In terms of customer concentration, again, Therapure is a relatively young company. I guess it all depends on perspective. So we have built up our client base. Over time, we have dealt with about 40 to 50 clients. We typically in any one year will deal with about 20 clients, and it would not be surprising that probably four or five of those or three or four of those would represent about 40%-50% of our revenue. Although the mixtures tend to change, and we see that diluting further as we go forward.
We have been very fortunate to or worked very hard, whichever way you wish to look at it, to identify late-phase opportunities and windows. The company is in a situation today where it already has commercial product being sold out of the facility, along with a number of projects that are in very late phase commercial phase III and about to go commercial in the short and near-term future.
So, we see that revenue concentration continuing to drop as it has done over the years. Some of the major drivers towards the profitability improvement has been just what I have talked about, has been the scaling to commercial scale manufacture and frankly starting to leverage a fixed cost base that we put into the business in the very early days. As you are probably aware, we were backed by Catalyst Capital Group.
We put in a management team and infrastructure that was capable of operating a much larger business than when we started. Today we start to see the leverage of that fixed cost, that drives our increased profitability as we go forward. In terms of profitability going forward and margin performance, I would expect that to continue to improve as we go forward, as we start to see some operational improvements in terms of manufacturing more batches of the same product, which allows us to get better efficiencies and increasing the utilization of the facility.
Well, thank you, Nick. John has a question on the timeline. Rachel, you can answer this. The timeline regarding the deal closing and the required EGM procedures.
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Right. Okay, thank you. Operator.
John, our first question now is from Jack Hu of Deutsche Bank. Please go ahead. Thank you.
Thank you actually for this opportunity. Also congratulations for a very actually successful deal. I have four questions this morning. The first question is a very simple question for Jing Lou, which is who approached who? My second question, actually, the first part is for Jing Lou. Actually, I want Nick to comment also on the same question, which is, how do you view your client relationship?
Because you come from a manufacturing background, actually, also offering client service. So this is different from traditional CMO, that you are offering pure service to client. So how do you view the advantage or disadvantage for being both of them? So actually, I would like Dr. Lou and Nick to address this question actually simultaneously. My third question is on your differentiation of your CDMO business. Actually, this question is for Nick.
You have 58% of your business concentrated in PDT, and how do you view the stability or the risk of the concentration of PDT in CDMO business? I have a slightly housekeeping question here. You have on slide five, you indeed broke down the customer type, but I want to ask specifically for that 55% plasma exposure, what is your client composition?
My last question is a series of small questions regarding financials that I hope our CFO can help me a little bit here. From your S1 filing in Canada, you have CAD 118 million, since that is CapEx, how are you going to book that versus goodwill? Also my last housekeeping question is, you booked CAD 33 million revenue in 2014 from your S1. Is that a Canada dollar or U.S. dollar?
I am going to stop here. Thank you.
Jack, this is Bo here. Basically for the project, the project actually started several months ago, and both parties were advised by the financial advisors. The sell-side advisor is Wells Fargo, and the buy-side financial advisor is Lazard. We got the information from the advisors at the beginning, the buyers' consortium got the potential interest at that time. The second question is on the client relationship. I will ask Nick to address that.
Thank you, Mr. Bo. I have a sort of a general view of client relationships, period, is that I do not think it is particularly relevant whether you are manufacturing or commercial. The way of dealing with a client is to understand the client's needs, and then service them, whether you are selling a product, a drug, or a manufacturing process for them. We are a very service-orientated organization and frankly differentiate ourselves on that we are very interactive with our clients.
We work very hard to create an intimate relationship with, frankly, in the case of small and emerging pharma, the way that I describe a client to my sales guys is a little bit like a newlywed couple with their first child, and they are going out for their first date and leaving it with a babysitter. In most cases, our clients literally have one or two products, and they are very careful who they give those products to, and you have to provide them with a high degree of comfort that you are going to look after and develop those products well for them.
That is a prime example, in my view, of looking at a client and differentiating how you go about dealing with them. In the case of big pharma, another example would be they are quite different. They do not only have one child, they have a whole tournament of them, and they have a great deal of knowledge and understanding and are much more sophisticated in many occasions, and therefore there is a different value proposition around capability and cost and things like that in those cases.
We look at our clients in a very specific manner, try to identify their needs, and I do not think that is particularly different with any business in any area, although B2B obviously does have some subtleties that are different to B2C. Also, I would say that from a personal perspective, we have run or we have developed up until this transaction, our own products business with a product mentality.
We very successfully built a business around looking at customer-facing drug sales as well as the existing CMO business. The business I am leaving to join 3SBio is actually very similar to the business that 3SBio has in that it has both a CMO operation and also a pharmaceutical business as well. You had also asked the question, I believe, in terms of the revenue of CAD 33 million in the S1. In that case, that would have been in Canadian dollars as it was a Canadian listing. I just have one more question I believe I was asked, was about concentration in the plasma space. In terms of concentration in the plasma space.
We have a number of clients, I am going off the top of my head now, which I think is at least four, maybe five clients in that area specifically that come to mind, of which there is about six products, I believe. There is an element of concentration there. One of those clients is the ProductsCo, another one is a global multinational organization out of Europe, and we manufacture two products for them.
Then we also have some U.S. customers who are developing plasma proteins as well. In fact, two others that come to mind. There is a spread. I would say at the present moment in time, the materials for ProductsCo represents the largest revenue this year. In the coming years, we go commercial with the European client, and so those revenues will start to grow and develop there as well. I hope that answers your question.
Thank you.
Thank you. Our next question comes from Ellen Ma, Blue Ocean in China. Thank you.
Congratulations management. Thank you for taking your questions. I actually have three questions. The first is with regard to Therapure. Can management give us any guidance on the number of the products that is already in phase three and approaching commercialization, and what is the expected earnings, let's say, in three years time in this phase three to commercialization pipeline? [Non-English content]
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[Non-English content ] Ellen, actually our Therapure's backlog order until 2020 is over $400 million. Nick, Ellen's question is how many late stage products or products close to commercialization are in Therapure's pipeline, and how much business it could potentially generate in the near future?
Hello, Nick.
I'm sorry, Nick. Are you on the line?
Sorry. I was actually speaking, but I was on mute. My apologies.
No problem.
We have presently four existing commercial clients. We also have three clients. The four we are already supplying. In terms of new clients with commercial products, which we have not yet started commercial manufacture to supply their markets, we have three additional clients. In addition to those, we also have three late phase III clients, two of which I expect to contribute very significantly towards those revenues in the window between now and 2020. So four existing, the three commercial clients that we haven't started supplying, just to give a little bit of background, these are products that they've already got where we are a change of site or an additional site of manufacture.
In the case where we're the additional site of manufacture, we have a take or pay agreement. In the case of change of site, we are the sole supplier of that product today. In the case of the three phase III projects, one of them is close to a phase III read, which is looking very positive. The other one already enrolls its first patient next week, and it's a one-year phase III trial, which has never failed before, frankly, because it's close to a biosimilar. It's a plasma protein product, and we expect that one to start supply after the completion of their phase III and the construction of the facility to manufacture that product.
Thank you, Mr. Green.
Thank you, Nick.
Yeah, thank you. How would you evaluate the value of the backlog in total?
Ellen, I think the value I actually just gave the number, the current order we have is over 400. But other than that, we are not in the position to give you more than that number right now.
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Nick, we have investor's question from email. We're seeing a lot of business that's on the plasma product processing. Just want to have you help to understand more about our capability in antibody drug discovery and also development versus peers such as Lonza and also Samsung Biologics. Could you also comment on the capacity in our mammalian culturing, which is separated from our blood product purification, of course. Thank you.
Yes, certainly. When we started the business, we focused very heavily towards the plasma protein area, mainly because no one else could do it, and we were extraordinarily good at it. If you look at our business in terms of where it is today, you would see a predominance, not necessarily of just plasma protein, but plasma-derived proteins, fill-finish, and downstream processing products like transgenics and things like that.
As the company has matured, we started entering into the mammalian cell culture area around late 2010, early 2011. Actually, of our new business that we captured last year, more than 50% of that was actually mammalian cell culture. New business last year represented more than 25% of our revenue in new clients identified in the year. We're seeing a strong growth in terms of mammalian cell culture.
But in any business when you start off, you look for the areas where you can command a position over and above everybody else, and that's what we did in the plasma and transgenics fields. In terms of going forward, I see capacity rather, in terms of mammalian cell. Today we have 500-liter train and we also have a 1,000-liter train. Both of those are operational.
So relatively small, mainly focused around pre-clinical phase I candidates, which is where we see the tremendous synergy between Therapure and 3SBio, in that we have never been able to target later phase projects. It's one of those things where we've moved along the phases with our clients. But with 38,000 cubic meters of capacity, it really puts us in a field, frankly, up and amongst the likes of Lonza.
And I was extraordinarily impressed with Deyu and Dr. Yang, and other members of the team in China, which I think will help us drive with a combination of our CDMO processes and practices and contacts within the Western pharmaceutical industry and the understanding that we have locally in terms of the development scale and early phase clinical, allied with the large-scale commercial capability and cost structure of 3SBio. I think that's a very compelling offering, which I wouldn't say tomorrow is going to be, or today rather, is going to be comparable with Lonza. But I certainly see that as a clear target of where we could get to.
Yes. Operator?
Okay. Our next question comes from Richard Xue, Goldman Sachs in Hong Kong. Thank you.
Sorry, can I just complete, just one other point I would like to make in terms of the last point I made. I just mentioned Lonza, but there are only around 10 that I would consider serious players in the biological CDMO space. I think the combination of 3SBio and Therapure puts that combination certainly in the top two or three, and certainly in the category one, as I would describe it, with the rest of them in either category two, category three, or category four.
So it really places, I think, 3SBio as a combined entity in a very, very strong global position where there's a whole host of customers who previously we knew but didn't do business with. We now can go in there with an offering that I think is very compelling. I know that's something that excites Dr. Zhang as well.
Thank you.
Okay. Can I ask you a couple of questions? Thanks for taking my question. I have a couple questions. First question, it looks like Therapure is actually growing pretty fast. Maybe you can talk to us, or Dr. Lou, is that if we look at the company's growth trajectory in the next probably three-five years, what will be the normalized growth rate and also the normalized EBITDA margin or net margin we're looking for if the company has been going through a more steady type of growth trajectory? The second is, the nature of moving the potential, moving the manufacturing from Canada to China, what kind of a utilization that we can get, or how fast that we can utilize the 20,000 capacities or 20,000 or 30,000 capacity that we currently have at 3SBio?
The third question is, relative to, I think we spoke a little bit more about the competitive edge versus Lonza, Boehringer Ingelheim, let's say Patheon or WuXi Biologics. Also, on the pricing of those projects, how competitive you are with other CDMO players in the area? Also, the last question is, can you talk to us, a typical project that has been doing at Therapure and where you're taking further steps, let's say, from the research stage all the way to manufacturing. How long would it take and what kind of effort are you actually putting in moving along these projects? Thanks for taking my questions.
Richard, thank you for the questions. I think in terms of. I'll answer first the question, then maybe I'll ask Nick to help me with addressing the second and the third question. In terms of the margin and revenue growth projection, we do expect the Therapure as well as the combination of Therapure with the Sirton and Sunshine Guojian's capability going forward to deliver strong growth going forward.
It's difficult for me to give you a five-year projection because a lot of synergies will need to be utilized going forward. But for next year, we're expecting at least over 30% revenue growth going forward. The margin level, as we just mentioned, we expect the margin to continue to expand because the major investment, the infrastructure investment, whether it's the hard assets or the software, et cetera, have already been made in the past.
We do expect expansion of the margin going forward. There is one similarity between Therapure and Sunshine Guojian, is that we actually already invested all the hard assets before the service actually got really started. So that answers your first question. Maybe Nick Green can. So maybe Dr. James Zhang is in a good position to answer the second question. It's more about Sunshine Guojian. So, Dr. James Zhang, please.
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Operator.
Okay.
Sorry. I think due to the time reason, this is probably the last question we are going to take. I will just pass along the time to the management for closing. Thank you, everybody.
Okay. John, actually, before we close, Nick will answer the last question for Richard, okay?
Okay. Sure. Yes, please go ahead.
Yeah. Nick, just answer.
Yeah. I think the question was regarding competitiveness against people like Lonza. In terms of our competitiveness in pricing and the cost of manufacture, I think we are extremely competitive with those clients. The biggest issue in competing with them generally has come down to two fundamental factors. One is experience and the other one is capacity.
I think technically we are very competent and we have the capability, and I think that certainly exists within 3SBio. But in terms of capacity, we have never had, I believe it is 38,000 liters of commercial scale mammalian cell culture manufacture. In simple terms, we have never even tried to compete in that space purely and simply because we have not had the asset base, not because we did not know where the business was, but purely because we could not support it.
I think going forward, we are able to walk into those clients now with a completely different offering. In fact, I can even say that we have had conversations with some of our clients who have become very interested when we have had initial diligence calls with them regarding this process. I think there is an enormous opportunity for us to compete there. I do not think cost competitiveness is an issue at all.
It will come down to the capacity and the technical capability which we will have going forward. I am very confident we have been able to compete with those. Having said that, it does take time. You do not win business in the pharmaceutical industry overnight. We will have to go through that process, prove ourselves and establish a reputation. In terms of taking products, you asked a question regarding taking products through the process.
We have brought clients in from anywhere from phase, from preclinical all the way through to actually they have already got a commercial product and they want us to manufacture it. It typically takes a couple of years to move from sort of three years to move, or two years to three years to move from preclinical to commercial. That is it for clinical data. The clinical phase can be anywhere between three to six years. It would be wrong for me to say that we have actually taken a client all the way from preclinical through to commercial, but we have certainly seen clients who have moved from phase II through to phase III and are about to go commercial, and we have taken them all the way through that.
In fact, one of the strengths of the company, I would argue, is the ability to scale up processes and manage them through that clinical pathway. In a business that is nine years old to have, as I mentioned earlier on, four commercial clients already, three products that are already commercial but we are establishing manufacture and three additional products in phase III. Frankly, I do not know any of my competitors who come anywhere close outside Boehringer and Lonza, who have been at it similar longer than nine years. No problem.
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